MihsabaHow to use
Estimate customer lifetime revenue and contribution using average order value, annual purchase frequency, lifespan and an assumed margin.
- Enter Average order value.
- Enter Average purchases per year.
- Enter Customer lifespan in years.
- Enter Contribution margin before ads (%).
- Calculate, then review the results and method assumptions.
How it is calculated
Example
AOV of 100, three purchases a year and a two-year lifespan give lifetime revenue of 600 across six orders. At 40% margin, contribution is 240 before acquisition costs and overhead.
Important notes
This model assumes constant averages, does not discount cash flows and does not model retention probabilities. Use observed cohorts and treat lifespan as a changeable assumption, not guaranteed future revenue.
Worked examples and interpreting results
AOV of 100, three purchases a year and a two-year lifespan give lifetime revenue of 600 across six orders. At 40% margin, contribution is 240 before acquisition costs and overhead.
| Case | Calculation | Result |
|---|---|---|
| Lifetime revenue | 100 × 3 × 2 | 600 |
| Estimated contribution | 600 × 0.40 | 240 |
How to check the result
This model assumes constant averages, does not discount cash flows and does not model retention probabilities. Use observed cohorts and treat lifespan as a changeable assumption, not guaranteed future revenue.
Frequently asked questions
Is lifetime value revenue or profit here?
Two values are shown separately: lifetime revenue and margin-based contribution. Contribution does not subtract acquisition or fixed overhead.
Can purchase frequency be fractional?
Yes. An average of 2.5 purchases a year describes a customer group, not a literal fractional order in one customer’s history.
Does this convert currencies or import campaign data?
It uses only entered numbers, without import or currency conversion. Align currency, period and metric definitions in your source before entering values.